Don’t Ignore this 4-Letter Word: Risk

Risk is a crucial consideration for all inventors.

Inventors seek patent protection for many reasons. There is the fear that others might steal their idea; personal credibility or vanity; for the experience; the potential to make money from the patented new product; and perhaps because someone told them they should do it.

But as with many other endeavors, it’s imperative to consider the risk factor. Sean Butner addressed this in his chron.com article, “What Risk Does an Inventor Assume When Filing for a Patent for an Invention?” Good question! On the other hand, what risks does an inventor assume if he or she doesn’t file for a patent? Let’s address these questions separately.

Keep in mind that few inventions ever make it to the marketplace, patented or not. And although a patent can provide valuable protection for a successful invention, getting a patent doesn’t necessarily increase the chance of commercial success. Remember that a patent only gives you the right to exclude others from making, using, offering for sale, or selling an invention in exchange for disclosing your invention to the public. Having a patent is not a requirement for you to make or sell your invention, but it does provide you with legal ownership of your idea for a limited period. Thus, you own some form of intellectual property that is potentially marketable.

Timing is an issue in seeking protection via a patent. Remember that the United States uses a “first to file” system— meaning that, in general, when two people independently invent something, the first inventor to file an application for a patent on the invention gets the patent, regardless of who came up with the invention first. In this situation, delay is a risk. Waiting to file increases the chances that someone else will independently come up with the same invention you have, file before you, and get a patent on the invention.

Risks if you file

For those who don’t wait to file, there are these risks:

• You may find that your invention is not patentable because it fails one or more of the novelty, non-obvious and/or useful tests for utility patents, or perhaps conflicts with significant prior related art. Patentability of an invention is often uncertain in the sense that, if you don’t get a denied application, you may get some denied claims that result in a drastically narrowed-down, less useful version of the original application. That is, some of the key claims that you thought were potential discriminators have been denied.

• When you file, the United States Patent and Trademark Office publishes your application 18 months after filing. So you incur the risk of telling the world what you have in mind and, as a result, potential competitors have the opportunity to explore and develop potential competing products—thus entering the marketplace with you. The threat of competition is always a risk.

• Doing it yourself is the most inexpensive way to get a patent, but it is risky without the help of a patent attorney or agent. You should recognize that the “language” of a patent application is what attorneys are familiar with; not using commonly understood terms in this context may hurt you. If an inventor doesn’t file an application correctly, he or she risks having the application rejected.

• Inventors filing for a patent take on the risk that the fees they have to pay (attorney or agent plus filing fees) will eventually pay off and be recovered when the invention becomes profitable. There are many reasons this might not pay off: not a big enough market; too much competition; no one wants to buy or license your patented product from you; and you are unable to manufacture and sell it yourself. This is why you should always perform market research to assess whether your idea is economically viable before you start spending money. If it’s not worth it, don’t do it!

• In his blog at quora.com, patent attorney Russ Krajec says that when you are presenting your new patented invention to a potential buyer, you must convince him or her that it will generate lots of income—but in this regard, there are two major risks. First is the technology risk, which includes whether the invention actually works, as well as whether the product can be manufactured with plenty of margin to make a profit. Second, you have to address the market risk, which includes whether someone would buy it and how much he or she would be willing to pay.

• As a result of the America Invents Act, once a patent is awarded, any third party can challenge it for up to nine months after the patent is granted. By filing a patent, an inventor takes on the risk of incurring unexpected legal costs from these post-grant oppositions.

Risks if you don’t file

• Unless you have established some type of legal ownership (not counting trademarks or copyrights) of your new product, it will be difficult to sell it or license it.

• Without some type of intellectual property protection (i.e., IP rights), competitors could take advantage of your invention. If the product is successful, competitors may be tempted to make the same product by using your invention without having to pay for such use.

• If you decide to manufacture and sell your new product by yourself, you run the risk of infringing on someone else’s patent(s) unless you perform some type of initial patent search. You should always check this before entering the marketplace. Even if you came up with the idea independently, someone may already have something identical (or close enough in protected features and/or functions) in the marketplace that he or she already has patented.

• If you have a new product idea that is more of a novelty or seasonal fad item with probably a market life of less than three years, the general consensus is to not waste time and money to get a patent because it probably won’t issue until after the product life has expired. In this case, go make your money and run!

Whether you patent or not, inventing is all about risk taking. Dean Kamen, best known for inventing the Segway electric scooter, said that in the invention development process, “Taking risks is essential.” And a popular business proverb says: “Progress always involves risks. You can’t steal second base and keep your foot on first.”